Booyoung may face biz suspension

The Korea Times

The Korea Times

Business

Sat, December 9, 2023 | 08:53

Companies

Booyoung may face biz suspension

Posted : 2017-08-01 16:42

Updated : 2017-08-01 17:41

Lee Joong-keun
Booyoung Group chairman

By Lee Hyo-sik

Booyoung Group may face a business suspension as the Seoul Metropolitan Government (SMG) is moving to penalize it for its shoddy construction of an apartment complex, south of the capital city.

Since President Moon Jae-in came to power on May 9, Korea's 15th-largest conglomerate by assets has run into trouble with the central government and municipal administrations for alleged tax evasion, an ambiguous corporate governance structure and other controversial business practices.

The latest allegation of building faulty apartments, amplified by the Gyeonggi Provincial Government and Hwaseong City Government, is expected to further push Booyoung, headed by Chairman Lee Joong-keun, into a corner.

On Monday, Gyeonggi Gov. Nam Kyung-pil said the provincial government will take all possible measures against Booyoung, which builds apartments and leases them to mostly low-income families, for constructing poor apartments in Dongtan, a new town in Hwaseong, Gyeonggi Province.

"I visited the Booyoung apartment complex of 1,316 units in Dongtan three times to check on the surging number of complaints filed by residents," Nam told reporters. "I saw mounting evidence firsthand, which clearly showed the apartments are saddled with hundreds of defects. As a governor, I will do everything to make Booyoung take care of all the mess and protect residents' rights."

In March, people began moving into the problematic complex, which took only 24 months to build. Normally, it takes about 32 months to complete construction, according to Nam.

Hwaseong Mayor Chae In-seok also said the city will take all available administrative steps to correct Booyoung's business practices, adding that it will soon ask the SMG to suspend the builder's business license.

Under the law, a municipal administration can suspend builders' licenses if they are found to use defective construction materials and build sub-standard housing. Since Booyoung registered its license in Seoul, only the SMG can order the company to stop its operation.

A SMG official said the city will first review all the documents delivered by Hwaseong City and Gyeonggi Province before deciding whether or not to issue an administrative order against the builder.

"We will also ask Booyoung officials to tell us their side of the story. We will go over all the materials thoroughly before making a decision," the official said.

A Booyoung spokesman said the company has been doing everything it can to fix the problems. "Despite our efforts, there are still more problems to solve," he said. "We will do our best to make the Dongtan complex a sound residential place."

In addition, the company has run into trouble with Jeonju City Government and Jeju City Government as it allegedly raised rents by more than legally-allowed rates. The cities filed a complaint against the company with the police and the Fair Trade Commission (FTC).

Booyoung is also under investigation by the FTC for allegedly excluding seven companies managed by the chairman's relatives from a list of its subsidiaries that had to report to the FTC, and possessing shares in six affiliates under borrowed names.

leehs@ktimes.com